Category: Latest Updates

Italian authorities have rejected a request by the extraordinary commissioners of the former Ilva company to carry out remedial work on blast furnace No. 2 at the Taranto mill now run by ArcelorMittal Italia. The furnace will now be shut down, the steelmaker says in a note monitored by Kallanish.

ArcelorMittal Italia is investigating the repercussions that the decision may have for the Taranto plant. It hopes that an alternative solution may be found to the closure as BF 2 is an integral part of the Taranto site it says, although the steelmaker is not party to the legal procedure.

The order by the authorities to shut down the furnace was passed in early July (see Kallanish 10 July).

ArcelorMittal now finds itself in a difficult situation with its Italian acquisition. The new Italian government is trying to make the company take responsibility for costs arising from environmental issues which arose before the site was acquired from Ilva. Previous reports have suggested that, under the terms of the acquisition, the ArcelorMittal group may be able to relinquish control of the mill in early September, should a solution not be found.

The often-rumoured potential of  Klöckner going for a major joint venture with thyssenkrupp’s distribution unit Material Services is largely off the table, says Klöckner’s ceo, Gisbert Rühl.

A press report last week of a meeting of the top management of both companies had refuelled such speculation. However, Rühl played down its significance in his company’s results conference call this week. “Of course, we are talking to (thyssenkrupp ceo) Guido Kerkhoff. We do meet sometimes, we even live in the same neighbourhood in Essen, after all,” he told Kallanish.

Consideration of taking a major stake in tk Materials Services essentially expired when tk AG re-declared steel as one of its core businesses after the failure to merge tk Steel with Tata, Rühl said. There was never any active ambition from Klöckner’s side in that direction, and any deal would have been a result of the earlier circumstances if tk had integrated with Tata, he stressed.

Klöckner still remains open to some form of cooperation, “… and we can imagine taking a minority stake, for example, but essentially we are not looking for acquisitions these days,” Rühl said. He noted that the company is currently busy with restructuring its operating business, delegating responsibilities down to the country units, that have previously been held by the holding company.

Russia’s NLMK has signed partnership agreements with two of Russia’s major steel distribution companies, Metallservis and SPK (Stalepromyshlennaya Kompania), whose combined steel sales last year totaled 4.3 million mt, NLMK reported Wednesday.

The partnership gives the distributors access to NLMK’s online steel shop https://nlmk.shop/ where — for a small commission — they can market those products which complement NLMK’s own range, NLMK’s president Grigory Fedorishin told journalists.

As a result of the partnership, the steel assortment available through NLMK’s online shop will expand to 20,000 products, in preliminary estimates. The company launched the online shop in March 2018. In the first half, its sales doubled year on year to 36,000 mt.

Metallservis and SPK will also benefit from partaking in NLMK’s marketing resources and IT-expertise. In exchange, NLMK will use the firms’ logistic services and storage capacities, which together with NLMK’s own sites will comprise 70 warehouses across Russia.

NLMK’s announcement came two weeks after Severstal reported it teamed up with Evraz Metall Inprom (a distributor owned by Russian fellow steelmaker Evraz) to test joint sales through Severstal’s online store, as Platts reported in mid-July.

— Ekaterina Bouckley

UK car manufacturing fell by a fifth in the first half of 2019, with a year-on-year drop in June marking 13 consecutive months of negative growth, according to figures released Wednesday by the Society of Motor Manufacturers and Traders.

A total of 666,521 cars were produced in the first six months of this year, a year-on-year loss of 168,052 units, or 20.1%, “due largely to falling demand in key markets, including the UK, exacerbated by factory shutdowns pulled forward in anticipation of the March Brexit deadline,” SMMT said. June output was 109,226 units, down 15.2% from the year-earlier period.

“Today’s figures are the result of global instability compounded by ongoing fear of ‘no deal [Brexit],'” said Mike Hawes, SMMT’s chief executive.

“This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation — money that would be better spent tackling technological and environmental challenges,” he added.

In June, output for the UK rose by 2,791 units following an anomalous 47.2% decline in the same month last year when preparation for the new WLTP emissions test affected volumes. The underlying trend, however, remains downward, with year-to-date production for the domestic market down 16.4%, SMMT noted.

The number of cars built for export fell by 19.8% in June and by 21.0% in H1 in the face of “softening of key overseas markets and global trade tensions,” the group said.

The UK automotive sector has already spent at least GBP 330 million ($401 million) on “no deal” Brexit contingency plans, while inward investment into the sector “effectively stopped” in the first half of the year,” SMMT said.

“In the period January-June, newly pledged investment was down more than 70% to GBP 90 million, contrasting with the average annual investment figure of GBP 2.7 billion over the previous seven years,” the group said.

— Andy Blamey

Following the profit warning it issued about a week ago, Germany’s Klöckner & Co expects negative impacts from a fall in demand for the remainder of 2019.

In the second quarter of the year, revenue dropped by -6% to € 1.68 billion ($1.87 billion) from the second quarter of 2018, on volume sales of 1.48 million tonnes, down -8% year-on-year. From Q1 to Q2, shipments and revenues remained relatively unchanged. Net income was €28 million, compared with €33m in the prior-year quarter. The company cites a negative volume and price effect of in total €69m, mainly due to y-o-y negative windfall effects in the US, weaker automotive business and weaker market sentiment in Germany.

Looking forward, it expects demand to stall mainly in the European automotive and mechanical engineering sectors. While the negative price effects in the USA are likely to be greater than originally expected, ceo Gisbert Rühl does not exclude a stabilisation of prices, he said during a conference call. There could even be a slight rise in prices, he continued.

“The outlook is clearly bleaker, and we cannot expect a growth of more than 1%, neither in the USA or in Europe,” he added during the call monitored by Kallanish. While car production in Europe has surrendered some 12% in Europe, one sector that still does well on both sides of the Atlantic is ship-building, he noted.

SSAB has announced that it signed an agreement with France’s Jacquet Metal to acquire Abraservice. The latter is a company supplying products in quenched and tempered steels, Kallanish learns from SSAB.

The acquisition is subject to approval by authorities, but should be closed in the second half of 2019. Abraservice operates with 10 processing centres and 12 sales offices across 11 countries (including France, Germany and Italy).

Even after the deal is confirmed, the company will continue to operate as a separate unit as part of the SSAB group, and will retain its name. Abraservice is expected to “… benefit from SSAB support and expertise, extended product range and global geographical coverage to expand its strong market position in distribution and fabrication of parts in Europe and beyond,” the Swedish high strength steel specialist says.

“The Abraservice network is well aligned with SSAB Services strategy of providing products and services to machine builders and the aftermarket business. The acquisition will help us to further improve our direct relationship with customers and end-users, as well as address new market segments. The workforce of Abraservice has recognised experience and the skills of local management and employees will combine with SSAB in an excellent way,” says head of SSAB Services, Gregoire Parenty.

Insight: British Steel sale ‘may take some time’: receiver

A sale of British Steel, which entered compulsory liquidation in late May, is expected to “take some time,” due to “the complicated nature of the business,” and as due diligence takes place by potential investors interested in the entirety of the business, a spokesman for the official receiver said Tuesday.

“There is no specific update available at this time,” the spokesman said in an email to S&P Global Platts. “The official receiver is continuing to assess the most viable offers received for the whole of the business, which are subject to completion of their due diligence. Due to the complicated nature of the business I expect that it will take some time to conclude a transaction. While this process is underway, British Steel is continuing to trade and supply its customers.”

Last week, scrap metal trade association BIR (International Recycling Bureau) reported British Steel’s receiver had indicated it wished to reach a conclusion on the plant’s future by the end of August, following the planned summer shutdown at the company’s integrated plant in Scunthorpe. This followed a July 15 cut-off date for rescue plan bids, according to BIR. However, sources have since indicated that the increasing likelihood that the UK will leave the EU without a deal may now prolong decisions on British Steel’s future.

The receiver’s spokesman Tuesday gave no indication of when a decision may be expected, or whether a sale could occur before a potential Brexit.

British Steel is the UK’s second-largest steelmaker, behind Tata Steel, with around 3 million mt/year of installed capacity. It has sites in the UK, France and the Netherlands and directly employs some 5,000 people. According to UK Steel Association data, British Steel produces 96% of the UK rail network’s steel rail, with customers including the UK’s Network Rail, which takes 100,000 mt/year and is a confirmed bidder for the company. Turkish and Chinese steelmakers recently denied they are interested in bidding for British Steel.

Market indications are that new UK Prime Minister Boris Johnson’s pledge in recent days to boost UK infrastructure, including by building a new rail link between Leeds and Manchester, could help support a sale of the steelmaker, which has recently suffered from squeezed margins due to strong prices for iron ore and coking coal, two of its main raw materials, and carbon emissions prices reaching 11-year highs.

Last week, the French subsidiary of British Steel, British Steel Saint Saulve (known as B3S), was taken out of liquidation by a French court ruling, B3S’s CEO Cedric Orban told Platts.

The Strasbourg High Court approved a Eur94.5 million ($105.3 million) investment and rehabilitation plan backed by private investor Greybull Capital, British Steel’s former owner, the French state and others, which makes B3S (formerly known as Ascoval) completely operational, Orban said in a statement.

‘No deal means no steel’
A no-deal Brexit is considered unfavorable for the UK steel industry as the UK government has already announced plans for zero import tariffs on most steel and steel-containing products in the event of a no-deal exit, in a move to reduce costs for UK manufacturing industry, including the automotive industry.

Despite the tariff news, however, vehicle manufacturers Honda, Ford, Nissan and PSA have all announced plans to either close, move or consider moving production capacity out of the UK as Brexit approaches.

In this scenario, “No deal means no steel” has become a catchphrase used in recent days in parliamentary circles, including by the member of parliament for Scunthorpe, where British Steel’s main plant is located, and by opposition leader Jeremy Corbyn.

— Diana Kinch

Spain’s Network Steel is curently boosting output through investments at its pickling mill in Todoaceros and its pre-painted line, Aranda Coated Solutions.

At Todoaceros the group is investing €3 million ($3.34m) in new environmentally-sustainable pickling equipment, Kallanish notes. The new investment will also improve capacity at the plant, raising it at some 80,000 tonnes/year as from September, when the investment will be completed.

At Aranda Coated Solutions (ACS) the group is also boosting output this year by operating four shifts. The plant is equipped to produce up to 100,000 t/y of prepainted coils and this year output should surpass 80,000 t/y.

The increase in output is supported by better demand for pre-painted coils in Spain arising from the construction sector. In July ACS together with the mill’s other pre-painted facility, Santander Coated Solutions, produced more than 20,000 tonnes of pre-painted coils, beating previous output records by the group.

Ford Otosan and Tofas have each announced three-week production stoppages as a result of “…annual leave,” the Turkish automotive manufacturers say in notes seen by Kallanish.

During the stoppage Ford Otosan will carry out maintenance work on its Gölcük plant from 29 July-17 August, its Yeniköy plant from 28 July-19 August and its İnönü plant from 27 July-16 August. Tofas will carry out maintenance from 5-25 August.

Turkey’s slowing economy since mid-2018 has curtailed demand for vehicles, thereby reducing requirement for auto steel.

According to Turkish Automotive Manufacturers’ Association (OSD) data, in the first half of 2019 Turkish automotive production fell -12.8% on-year to 735,062 units, with passenger car output down -11.6% to 492,700 units. Turkish domestic passenger car sales fell -43.3% to 156,378 units. Overall automotive exports fell -7.7% to 634,768 units.

Klöckner & Co has appointed Oliver Falk and John Ganem to its management board effective 1 August, Kallanish learns from the German-based steel distributor.

Jens Wegmann, who has been a member of the board since December 2017, will leave the company in mutual agreement, Klöckner’s statement says. His responsibilities as coo will be assumed by John Ganem in the USA and by ceo Gisbert Rühl in Europe.

Oliver Falk takes over the function of cfo, which was temporarily assumed by ceo Gisbert Rühl. Falk has been active in leading positions in the group for more than 25 years and is currently cfo of Kloeckner Metals Europe GmbH. The management board of Klöckner will thus consist of ceo Gisbert Rühl, cfo Oliver Falk, and ceo Americas John Ganem.

In the course of the realignment of the management board, a further decentralisation of activities was decided, the company notes. It says it intends to take even greater account of the different structures in the countries in terms of organisation, and promote more independent and entrepreneurial action in the group companies. In return, this leads to a reduction in responsibilities at the level of the group’s holding. In the future, the holding will focus on core functions and the design and control of the digitisation strategy, Klöckner says.